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It should be possible to offset development costs and others against gross profit and I'm not forgetting Atomic had a considerable allowance that could be taken forward. But that's more applicable to cash flow and not what we're trying to appraise here.

So finally, we're at $236m less $52m, to give us a "notional earnings" figure or final netback or net profit whichever you prefer to call it of around $184m.

Just three more steps needed then to calculate COPL's MC & SP. Step1 $184m is £153m using today's currency conversion rate of 0.83.

O&G companies enjoy quite high p/e ratios and by my analysis that's an average of over 12x. However, COPL will be a relatively new company. So, for Step2 I'm going to suggest 8x would be more appropriate. Being conservative would give the market time to catch up given COPL will be less than half way up its development curve and growing quite quickly. So that reasoning being about right, COPL should have around £153m x 8 giving the Company a £1.22bn Market Cap.

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Finally, today COPL has roughly 313m shares in issue. In March next year however, we also need to count the 2024's warrants. So, I'm going to suggest we use 350m as shares in issue for Step3. In which case COPL's SP should be £1.22bn ÷ 350m which is 350p.

You may want to refine the fundamentals I've used and insert your own if you don't agree with them. Care will be needed as a substitution of any of the fundamentals will not produce a straightforward linear adjustment to the MC or SP.

Substituting $100 per brrl WTI price with $80 per brrl results in a SP of just over 200p. Conversely if you believe Goldman Sachs and others are nearer the mark with WTI at $150 per brrl by then that would give COPL a SP of nearer 700p.

If you're considering a valuation in say 2025 or beyond don't forget to include any further warrants or bonds in your count of the number of shares in issue. Perhaps using 500m as a shares in issue figure would be more appropriate and be on the safe side.

For me the potential in COPL is nowhere near recognised yet. The Prospectus tells us that the BFSU optimises at over 7k bopd in a few years and runs in that steady state for many years.

As good as that is, it's tiny compared to the new FD discovery. I believe extraction could optimise in less than four years from now and run in a steady state of production of over 50k bopd with the right partner in a JV agreement.

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For perspective the total reserves in Wyoming is currently just shy of 800m barrels. So, if you imagine COPL has a total of around 1.6bn barrels of oil in place at a stimulated recovery rate of 40% - 50% which is analogous to others in the area then the new discovery could double Wyoming's current reserves (see footnote). After all, it is said to be the largest discovery in the US in the last decade.

Now let's risk assess the current situation and consider what COPL would be worth in a firesale. A situation which is most unlikely in my view. COPL paid Atomic roughly $65m for its shares followed last year by a 25m payment for CUDA. Both were in a distressed market. COPL has then paid $40m for gas at a hedged price. So collectively that's $130m at a discounted cost.

Now consider the new discovery at 1bn brrls of OIP (even though it's said to be much more by experts). Stimulated recoverable oil then would be say $400m brrls and that must have a value of at least $400m. So overall we have $530m which is £440m. In the analysis my calculation is based on first principles and it sits well compared to the $600m NAV asserted by Analysts.

So, say as a minimum 30% would go to shareholders given COPL's relatively small debt. Even at 30% that works out to be 41p per share which should bring comfort to all shareholders. Of course, there would be a lock-in period that might last six months or so. As I see it this is the worst case scenario and in the event extremely unlikely.

The reason why we haven't seen any Tr1's or signs of shares being bought by the JV Party or the like isn't difficult to understand. The information is "inside" and as such under the market's rules entities with the information are precluded from making the purchases. In the case of the JV Party and the banks I'm in no doubt this will be part of their NDA's.

If my appraisal is about right it means we could be looking at about 50 bags from here in a little over twelve months. Possibly more if the price of oil runs up from where it is.

To close some of you will know that Wyoming is set to become one of the largest carbon capture centers on earth this decade and COPL in its new JV is sure to become a significant part of that center.

Both the Biden administration and Wyoming lawmakers are encouraging the carbon removal industry to grow. The Bipartisan Infrastructure Law that passed last year includes $3.5 bn to build up four “regional hubs'' for direct air capture. The Inflation Reduction Act, which passed this year, greatly expands tax credits for carbon removal projects amongst other things. If it all works as planned this will be the icing on the cake for COPL.

All of this is just my opinion. Good luck all and let's hope we hear some good news soon.

Footnote.

Just for perspective the whole of Wyoming had 703 m brrls of proven oil reserves in 2020, which accounted for nearly 2 % of the U.S. total reserves.

COPL's final proven reserves when known

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It should be possible to offset development costs and others against gross profit and I'm not forgetting Atomic had a considerable allowance that could be taken forward. But that's more applicable to cash flow and not what we're trying to appraise here.

So finally, we're at $236m less $52m, to give us a "notional earnings" figure or final netback or net profit whichever you prefer to call it of around $184m.

Just three more steps needed then to calculate COPL's MC & SP. Step1 $184m is £153m using today's currency conversion rate of 0.83.

O&G companies enjoy quite high p/e ratios and by my analysis that's an average of over 12x. However, COPL will be a relatively new company. So, for Step2 I'm going to suggest 8x would be more appropriate. Being conservative would give the market time to catch up given COPL will be less than half way up its development curve and growing quite quickly. So that reasoning being about right, COPL should have around £153m x 8 giving the Company a £1.22bn Market Cap.

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Finally, today COPL has roughly 313m shares in issue. In March next year however, we also need to count the 2024's warrants. So, I'm going to suggest we use 350m as shares in issue for Step3. In which case COPL's SP should be £1.22bn ÷ 350m which is 350p.

You may want to refine the fundamentals I've used and insert your own if you don't agree with them. Care will be needed as a substitution of any of the fundamentals will not produce a straightforward linear adjustment to the MC or SP.

Substituting $100 per brrl WTI price with $80 per brrl results in a SP of just over 200p. Conversely if you believe Goldman Sachs and others are nearer the mark with WTI at $150 per brrl by then that would give COPL a SP of nearer 700p.

If you're considering a valuation in say 2025 or beyond don't forget to include any further warrants or bonds in your count of the number of shares in issue. Perhaps using 500m as a shares in issue figure would be more appropriate and be on the safe side.

For me the potential in COPL is nowhere near recognised yet. The Prospectus tells us that the BFSU optimises at over 7k bopd in a few years and runs in that steady state for many years.

As good as that is, it's tiny compared to the new FD discovery. I believe extraction could optimise in less than four years from now and run in a steady state of production of over 50k bopd with the right partner in a JV agreement.

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For perspective the total reserves in Wyoming is currently just shy of 800m barrels. So, if you imagine COPL has a total of around 1.6bn barrels of oil in place at a stimulated recovery rate of 40% - 50% which is analogous to others in the area then the new discovery could double Wyoming's current reserves (see footnote). After all, it is said to be the largest discovery in the US in the last decade.

Now let's risk assess the current situation and consider what COPL would be worth in a firesale. A situation which is most unlikely in my view. COPL paid Atomic roughly $65m for its shares followed last year by a 25m payment for CUDA. Both were in a distressed market. COPL has then paid $40m for gas at a hedged price. So collectively that's $130m at a discounted cost.

Now consider the new discovery at 1bn brrls of OIP (even though it's said to be much more by experts). Stimulated recoverable oil then would be say $400m brrls and that must have a value of at least $400m. So overall we have $530m which is £440m. In the analysis my calculation is based on first principles and it sits well compared to the $600m NAV asserted by Analysts.

So, say as a minimum 30% would go to shareholders given COPL's relatively small debt. Even at 30% that works out to be 41p per share which should bring comfort to all shareholders. Of course, there would be a lock-in period that might last six months or so. As I see it this is the worst case scenario and in the event extremely unlikely.

The reason why we haven't seen any Tr1's or signs of shares being bought by the JV Party or the like isn't difficult to understand. The information is "inside" and as such under the market's rules entities with the information are precluded from making the purchases. In the case of the JV Party and the banks I'm in no doubt this will be part of their NDA's.

If my appraisal is about right it means we could be looking at about 50 bags from here in a little over twelve months. Possibly more if the price of oil runs up from where it is.

To close some of you will know that Wyoming is set to become one of the largest carbon capture centers on earth this decade and COPL in its new JV is sure to become a significant part of that center.

Both the Biden administration and Wyoming lawmakers are encouraging the carbon removal industry to grow. The Bipartisan Infrastructure Law that passed last year includes $3.5 bn to build up four “regional hubs'' for direct air capture. The Inflation Reduction Act, which passed this year, greatly expands tax credits for carbon removal projects amongst other things. If it all works as planned this will be the icing on the cake for COPL.

All of this is just my opinion. Good luck all and let's hope we hear some good news soon.

Footnote.

Just for perspective the whole of Wyoming had 703 m brrls of proven oil reserves in 2020, which accounted for nearly 2 % of the U.S. total reserves.

COPL's final proven reserves when known

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This post is about COPL's cash position in the very short term as it continues to trade as a going concern. Yes it is able to pay its debts and therefore it is trading as a going concern. This post I've put together is fact based as far as possible 8 and supported by math where I've been able to.

Firstly on COPL's short term cashflow. As of the date of the Prospectus COPL calculated that as things stood it has sufficient to get to the end of March. This is stated very clearly in the document. So no not to the beginning of March as propositioned by some. They're simply being mischievous to suggest it's earlier or that COPL has no ways to obtain the necessary finance required. I say again the long-stop is the end of March.

There are several options available to COPL to raise cash. As we know we have the RBL and the JV which are in the latter stages of agreement.

On the RBL we've been told that term sheets from at least two banks were scheduled to be received by COPL in December.

And on the JV were told terms are being addressed. These two options are obviously the preferred ones given they're long term and with them comes stability. Perhaps the RBL won't be necessary if the COPL's needs are satisfied in the JV.

Then we have the accordion facility of $20m within the existing finance agreement, subject to terms if for any reason it's needed.AM has said he would prefer not to use this option as it locks COPL into the current contract for a longer term.

Next we have gas pipework under COPL's ownership. It was first highlighted in an early Analysts report. It's said to be worth around $10m with cash becoming available on a sale and lease-back basis. I believe it was installed by Atomic at a cost of $9m in 2019. So perhaps 10m is about right.

Then we have the cornerstone BH who undoubtedly are supportive as they've demonstrated recently. Followed by other BH's if needed and last on my list of options we have a placing.

So now let's look at how much finance COPL needs. We're told in the Prospectus it's just over $15m spread over the year starting from the Prospectus date. That is if circumstances don't change and as I say not all at once.

But circumstances are changing. We can see that from the BH's recent keenness to exchange their derivatives for low value shares. It hard to blame them but nevertheless it is a sign that they're still supportive in my view. Also we know COPL is working to recomplete three of the many existing wells at CC. It's likely that oil is flowing from two now.

Unstimulated, these three wells appear to be collectively capable of producing 350 bopd unstimulated. That is if the results of the first one is anything to go by and possibly 4x that. So 1450 bopd when stimulated.

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So let's consider by example how close we'll be to breakeven by mid March. If 1500 bopd or thereabouts is being produced at BFSU on an 85/15 split that's 1275 bopd net to COPL. And if 350 bopd is being produced at CC we have 1625 bopd in total.

Now let's say WTI is at $77/ brrl. In this example then we have 1625 x 365 = 593125 bopy and 593125 boo x $77 to give us $45.6m annual revenue.

Royalties and production tax works to about 30% given most of the production is on private leases with a much higher royalty charges and in all leases the special conditions production tax will be applicable. So $45.6m - 30% gives us $31.9m annual netback at this stage.

Debt payments are approximately $16m/annum and G&A etc a further $10m. So $31.9m - $26.0m gives us $5.9m annual netback after debt and G&A etc.

Finally production costs excluding tax at BFSU should be minimal given the gas is already paid for. So 465375 x $4 say to give us $1.86m which that should cover it.

Production costs at CC will be slightly higher as shipping is by tanker lorries. But 127750 x $9 should suffice from which adds a further $1.15m.

We then have virtually $3m/annum as a total production cost leaving us $2.9m annual netback before notional Federal tax . Federal tax is 22% which although unlikely to be paid should be accounted for to leave us with $2.26m final netback/net profit/earnings.

In conclusion I believe it's correct to say that COPL will more than likely be producing positive cashflow once the BFSU and the recompletion wells at CC are active even if they're in an early unstimulated state.

In both cases it's entirely wrong to say or imagine COPL isn't a going concern at the moment. It's very unlikely to be ever classified as such given its many options and ability to raise cash. The fact is that it's just at the turning point of producing sufficient boo in any event without raising further finance is my view

If you consider the recompletions being fracked in short order at minimal cost I see no reason why COPL shouldn't be producing over $1m/month positive cashflow at that point which would be easily enough to cover its debts and provide support for itsp ongoing Capex.

If I'm near right, and with conviction I believe I am, then it's little wonder AM isn't communicating with shareholders at the moment. He's sure to be in an NDA in the JV and given he thinks the new discovery presents such a rare opportunity he's unlikely to risk saying anything to anyone.

At the same time I believe he knows he has several options when it comes to raising cash if he needs to. So I very much doubt he's losing any sleep at the moment unless it's through the excitement of developing the new discovery.

This post is not meant to be a ramp or to encourage anyone to buy. I just wanted to lay down some of the facts and share them whilst also suggesting how AM might be feeling.

AIMHO and GLA.

To be accurate it's up to COPL to determine the long stop date by which it needs finance. At the time of the Prospectus it was the end of March. So it's more like 45 days from now, not 12.5 days. Quote from Perspectus:-

"The timing of any process (restructuring affairs) would DEPEND ON THE GROUPS (COPLS') VIEW..... If the Group is unable to raise the financing required BY THE END OF March 2023, the Group will LIKELY look to restructure its affairs"

Guys thank you for your support yesterday.

I'm not sure I said much that we didn't know already. But again thank you.

When the Company is more on an even keel we'll have to ask for a five year development plan.

From that we should be able to share an "NPV" perspective together as well. It would be interesting to see what that looks like and how it compares to the one posted yesterday.

The oil price makes such a difference in any such calculation. So from that any future hedging agreement will be important obviously.

Fingers crossed we hear positive news soon.

ATB.

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I've done as much research as I possibly can and I'm reasonably confident that COPL is on the verge of entering into a JV which will effectively release the value of all of its Wyoming assets. I believe AM is in the process of finalising term sheets with an appropriate JV partner and if that's right then we should be informed of the outcome very soon now.

I also believe that there will follow an agreement to restructure the Company's finances on more favorable terms with an alternative provider. As I understand it negotiations are also at term sheet stage.Together these negotiations when concluded should have the effect of allaying cashflow concerns and releasing the Kraken on the assets! It's not unreasonable to assume both agreements bring with them cash injections.

By the start of the sage grouse nesting season in March this year I see no reason why at least three of the chosen old wells at Cole Creek shouldn't be recompleted in their unstimulated state to allow fracking to follow on during the birds nesting season.

So possibly 3 x 500 bopd post stimulation from these CC wells which should match a similar output from the BFSU given its likely still to be constrained. So collectively 3k bopd in total from the two locations hopefully resulting in 2.25k bopd net to COPL by the end of March. That should put to bed any worries or discussions about the business being a going concern.

I'll try to keep my views that follow as simple as I can and the math rounded in any calculations. So I'd like to fast forward to March 2024 now and look at that future spot production milestone given it will be the start of the birds nesting season again next year.

At that time it's not difficult to imagine COPL producing 20k bopd as its share in a progressive JV. The production being a combination of 5k bopd from the BFSU (having replaced the low pressure gas gathering facilities by then) and 15k bopd from roughly 20 horizontal wells sunk in the new Federal Deep discovery. Assuming a split between the parties of roughly 50/50 of a total production of 30k bopd that is.

If the price of WTI at that point is say $100per brrl that would give COPL an annual revenue of $730m. There's lots of Analysts that believe the oil price in fourteen months time is likely to be at least that and Goldman Sachs for example has it much higher. I've used $100 per brrl as I believe it looks reasonable in my view and as I've said to keep the math rounded.

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I'm not a great advocate of using an "earnings metric" valuation method but on this occasion I think it's more appropriate than DCF's for example given it's less complicated.

On the cost side I find it relatively simple to consider them in three categories. Firstly those that should be applied as % of revenue such as royalties and production tax. Then those that should be considered on an annual basis such as debt payments and G.A. And finally those such as production that are best considered on a unit cost basis i.e. $'s per brrl.

Here I just would like to point out that royalties on the private leases are around 22% whilst those on oil extracted on the Federal leases (I e. Those more than 1 mile deep such as the Frontier 1 reservoir) are around 12%. So quite a difference.

I also want to say we're looking at horizontal wells or stimulated extraction which are categorised as "special conditions" as far as production tax is concerned. That rate is currently 11.6% or thereabouts I believe.

So to get to a notional "earnings'' figure in this example we have an annual revenue of 20k x 365 x$100 to give us $730m. From that we have to subtract royalties which are $180m x 22% for BFSU + $550m x 12% for FD to give us $625m. We then have to deduct 11.6% production tax which gives us $553m.

If the new finance is as I believe around $60m at say 12% APR an annual cost of around $20m should suffice to cover its repayment. Other annual costs such as G&A should be no more than $12m. So at this stage we're at $553m less $32m giving us $521m

Production costs should be no more than $15 per brrl which is roughly $110m leaving us a basis for the assessment at this stage of $521m less $110m giving $411m.

Using an earnings metric Capex costs are excluded for the first two years in my view as they're more than likely to be covered by refinancing and in the JV.

However Federal corporate tax should be taken at 22% on $411m albeit a notional profit figure and is unlikely to be paid. It should be possible to offset development costs and others against gross profit and I'm not forgetting Atomic had a considerable allowance that could be taken forward. Nevertheless I think it would be prudent to take it at this stage. That being the case we're at $411m less $90m would give us a "notional earnings" figure of around $321m.

Just three more steps needed to calculate COPL's MC & SP. Step 1 $321m is £266m using today's currency conversion rate of 0.83.

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O&G companies enjoy quite high p/e ratios and by my analysis that's an average of factor 11.6x
However COPL will be a relatively new company. So for step 2 I'm going to suggest 8x would be more appropriate. Being conservative would give the market time to catch up given COPL will be less than half way up its development curve and growing quite quickly. So that being about right COPL should have around £266m x 8 giving us a £2.13bn MC.

Finally today COPL has roughly 280m shares in issue were told. In March next year however we also need to count the 2024's warrants. So for step 3 I'm going to suggest we use 350m as a shares in issue figure as our fundamental. In which case COPL's SP should be £2.13bn ÷ 350m which is 609p.

You may want to refine the fundamentals I've used and insert your own if you don't agree with them. Care will be needed as a substitution of any of the fundamentals will not produce a straightforward linear adjustment to the MC or SP.

Substituting $100 per brrl WTI price with $80 per brrl results in a SP of 443p. Conversely if you believe Goldman Sachs are nearer the mark at $150 per brrl that would give you a SP of 1264p

If you're considering a valuation in say 2025 don't forget to include the warrants scheduled to be released that year in your count of the number of shares in issue. Perhaps using 500m as a shares in issue figure would be more appropriate and be on the safe side.

For me the potential in COPL is nowhere near recognised yet. The Prospectus tells us that the BFSU optimises at over 7k bopd I'd a few years and runs in that steady state for many years.

As good as that is, it's tiny compared to the new FD discovery. I believe extraction could optimise in less than than four years from now and run in a steady state of production exceeding 80k bopd with the right partner in a good JV agreement. Such is the size and potential of the new FD discovery in my view and as I understand it both parties are keen to make it happen.

This is just my take as a LTH and it's AIMHO.

Good luck guys.

The FD recompletion wells at CC are even more attractive.

We're into Federal royalty costs which are roughly 10% less than those paid to private landowners.

It's a substantial saving that's often overlooked

West Newton should be transformational for RBD.

Apart from a huge cash injection in a sale of the gas asset if RBD were to keep say 20% to 25% of it that will equate to about a £40m annual income based on the current projection and metrics.

The oil should be icing on the cake!

GLA.

It's a very positive CPR this morning guys.

I calculated West Newtons gas asset value net to RBD and posted my thoughts on Tuesday. But not knowing the details I applied a fairly aggressive Discounted Cash Flow to an earings metric calculation.Viz:-

"Applying an aggressive discount cash flow adjustment should put today's potential value for the gas fields at around £400m. RBD owns 56% which in turn then should put a theoretical value to RBD at £224m for it."

The CPR is suggesting $220m. So either way it's huge both for the country and RBD.

I wouldn't be surprised to hear of offers to buy it coming in before Christmas starting at £150m just for the gas element.

Just my view, so AIMHO.

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Amongst other things the RNS last Friday gave the market an indication of what the gas potential at West Newton might be worth. Albeit not explicitly.

This is the salient piece. Viz:-

"The anticipated recoverable gas resource at West Newton will have the potential to meet the daily gas demands of over 380,000 homes in the UK for many years to come. Based on OFGEM data indicating that an average 3-bedroom UK home consumes 7.9 Kwh/day of electricity and 32.9 Kwh/day of natural gas"

In monetary terms it equates to an annual production of 15.56 billion cu ft of gas or 155.6m therms. At today's natural gas price of around £1.50/ therm that would give a gas company an annual revenue of £235m.

More appropriately the company could potentially make £140m/year with a Market Cap of around £1.5 bn when operating in an optimised and steady state in a few years .

Applying an aggressive discount cash flow adjustment should put today's potential value for the gas fields at around £400m. RBD owns 56% which in turn then should put a theoretical value to RBD at £224m for it.

However it's RBD's intention to liquidate ownership in the field once the potential has been reasonably assessed. That being the case an adjustment should be made for the Capex needed to cover infrastructure costs of connecting the gas produced onto the grid and perhaps a small discount to attract any suitors. I'm guessing for now but suggest an adjustment down of £40 - £50m might be sufficient.

With roughly 9bn shares in issue that would give RBD a gross income of 2.00p per share at least for the sale of its gas asset

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Comparatively the oil asset is less attractive. I could be wrong but for environmental and local political reasons I'm not seeing a company producing more than 2000 bopd if that.

One horizontal well should be far more than to 2000biod even without the use of secondary extraction ( Fracking and miscible flooding etc ) So I'm not seeing the costs or the proposal to become an obstacle or there being political or environmental issues .

I'm also not seeing the supply chain problems referred to. Tubulars that were a problem because of the war are now more readily available and suppliers have now caught up albeit at higher prices.

1600 bopd shipped by tanker lorries represents eight trips per day and roughly 500k bopy. Revenue then using a $100/brrl Brent price would be around $50m or £45m. Earnings should be at least £20m of that giving the producer a Market Cap in excess of £200m when the fields are producing oil in an optimised and steady state.

Applying an aggressive DCF would reduce the £200m to £50m for a today's price and 56% being RBD's share should produce a sale price of around £20m allowing for a discount to attract a potential buyer.With almost 9bn shares in issue I have RVD's sale price of the oil asset then to represent approximately 0.22p/share.

For proportionality the oil represents just 10% or thereabouts if the gas asset. Collectively I'd be happy if 2.20p/ share for the two was realised in a sale in early 2023.

With the sale of its Victory asset I'm not seeing RBD having any cash issues in meeting the costs of monetising the West Newton Assets or a problem covering costs some time now. Rather I'm hoping the BOD's of RBD are in a position to issue a special dividend to its shareholders out of the West Newton disposal. We more than deserve it in my view!

AIMHO.

Thanks guys.

It's very much appreciated!

Could someone post a link to the Hedging Agreement or guide me to where I might find it please?

Also has there been any posts regarding the possibility of buying ourselves out of the GA once the debt has been paid of? Any guidance of the approximate costs of such an action would be appreciated.

GLA.